DTN Before The Bell-Livestock

Sluggish Buying Trickles Into Livestock Complex

Rick Kment
By  Rick Kment , DTN Analyst
(DTN photo by Nick Scalise)
GENERAL COMMENTS

Mixed prices within narrow trading ranges are seen early Monday morning. This is limiting any wide spread moves or sense of market direction early in the week. Traders are looking at outside market direction as well as the potential to spark some underlying support in cattle and hog markets through the middle of July. Corn prices are higher in light trade. Stock markets are higher, Dow Jones is 14 points higher while Nasdaq is up 2 points.

LIVE CATTLE:

Open: Steady to 0.60 cents higher. Light buyer activity is seen through live cattle futures with August and October contracts leading the complex higher just after opening bell. The overall support through the market continues to focus on the ability to bring increased trade volume to the market as August futures are leading the market higher. There will be increased focus on beef values through the week, which may spark some additional longer term interest in all markets. Cash cattle activity has reverted back to the quiet early week show list distribution and inventory taking. Given the price pressure that developed when deals were finally inked on Friday, the focus on overall market pressure is not holding across the entire complex. Given the limited trade, packers are expected to enter the week short bought once again. But this may still not be enough to draw both sides to the table before the end of the week. Open interest Friday gained 2,646 positions (320,350). Spot month August contracts lost 5,745 positions (81,369) and October contracts added 4,148 positions (111,387). DTN projected slaughter for Monday is 118,000 head.

FEEDER CATTLE:

Open: Mixed. Trade interest Monday morning has remained extremely sluggish as traders seem to have a "wait and see" approach when moving back into the market following the weekend break. Prices are 12 cents lower to 22 cents higher, although additional market shifts are expected to be seen through the rest of the morning. Currently it seems that there is some additional buyer support being built through the complex, but at this point it is uncertain just how much additional activity will develop, and if traders can maintain early gains in nearby contracts. Cash index for 7/10 is listed at $145.08 down 1.67. Open interest Friday added 235 positions (47,268).

LEAN HOGS:

Open: Mixed. Narrow trading ranges are seen through the lean hog complex with prices hovering from 22 cents lower to 7 cents higher in nearby contracts. The limited activity and direction in all livestock trade Monday morning may keep overall interest sluggish through most of the morning. Deferred contracts have posted additional market weakness, with prices 60 to 90 cents lower. The concern about long term pressure in the market continues to focus on summer 2019 pork prices and the potential that buyers may remain absent over the near future in relation to extended time frames. Cash hog trade Monday is steady to $1.00 lower per cwt. Bids are scattered through the entire range. Open interest Friday added 1,309 positions (232,809). Spot month July fell 701 positions (7,088) and August slipped 4,003 positions (47,024). Cash lean index for 7/10 is $81.52 down 0.15. DTN projected slaughter for Friday is at 430,000 head.

Rick Kment can be reached at rick.kment@dtn.com

(SK)

Rick Kment